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Chinese Investments in Latin America

On September 12, 2019, Freshfields hosted an interactive panel discussion on “Chinese Investments in Latin America in the Belt and Road Era,” which was co-sponsored by the New York International Arbitration Center (NYIAC) and the ABA Section of International Law.

The panel discussion, which was followed by a cocktail reception, featured some of the leading voices on Sino-Latin American relations, international arbitration and US sanctions and export controls, and was attended by approximately 100 business leaders, academics, attorneys and law students.

Included on the panel were Jorge S. Heine (Boston University research professor and former Chilean ambassador to the People’s Republic of China), Natalia Zibibbo (counsel in Freshfields’ international arbitration group), Stephanie Brown Cripps (counsel in Freshfields’ global investigations group), and Mayra Bryce Alberti (senior associate at Payet Rey Cauvi Pérez, one of the leading law firms in Peru and a member of Freshfields’ StrongerTogether network); the panel was moderated by Paula Henin (associate in Freshfields’ international arbitration group). In addition, Freshfields international arbitration associate Paula Henin served as the chair and moderator for the discussion.

At the event, the panelists discussed the clear upward trend in Sino-Latin American trade, which increased from $10 billion in 2000 to $306 billion in 2018. As they noted, investment in the region, which began in the mining and fossil fuels sectors, has now expanded to other sectors such as telecommunications, real estate, food, and renewable energy.

For its part, Latin America occupies a significant part of China’s foreign relations strategy, and as such, will continue to play a key role in the global economy and supply chain. This optimism should not, however, let Chinese investors lose sight of certain challenges affecting foreign business operations in Latin America. In this regard, the panelists touched on such topical issues as the threat perceived by certain US circles, arising from the growing Chinese presence in Latin America; the evolving environmental and social obligations of businesses in Latin American jurisdictions; the political and regulatory risks that can affect investments in the region; and the US regime for sanctions and export controls, especially within the context of the US-China trade war.

The key question for many is: What will happen to Chinese investments in Latin America in the near term? Based on the panel’s view, there will be volatility, but in general, investments in Latin America will continue to increase. China has a great deal of capital for foreign investment, and Latin America has a tremendous need for investment; those two forces are likely to bring more trade and opportunities for investors and further deal-making.

While prospects remain bright for continued investment in Latin America by investors from China and other countries, investors must nonetheless make sure to adopt effective risk-mitigation strategies at all stages of their investment’s life cycle. Chinese and other foreign businesses operating or planning to operate in Latin America will thus greatly benefit from the legal advice of local and international counsel.

Freshfields is uniquely situated to provide the necessary cross-border advice, supported by its global network of offices and its solid StrongerTogether partnerships with leading local law firms in Latin America and beyond.